Greater exposure to constructive interparental conflict (IPC) characterized by cooperation, warmth, support, and problem-solving uniquely predicts improvements in children?s mental health outcomes even after considering other family and child characteristics (Jouriles, McDonald, & Kouros, 2016). However, little is known about how, why, and when children directly benefit from witnessing constructive IPC. Although earlier research focused on examining whether decreases in children?s negative emotions and appraisals explain the link between constructive IPC and children?s better psychological adjustment, studies have consistently failed to support this hypothesis. Thus, new scientific calls have been made to examine whether constructive IPC may promote children?s mental health by increasing the salience of their approach or positive valence systems of functioning (Davies, Sturge-Apple, & Martin, 2016). To address this novel paradigm shift, this application is designed to break new ground by providing the first test of a new integrative process model of constructive IPC and its implications for children?s open, flexible, and positive responding to environmental stimuli. Specific aims are centered on examining whether prospective associations between constructive IPC and children?s psychological adjustment (i.e., lower internalizing and externalizing symptoms, social competence, school engagement) are mediated by their: (a) biases in attention to different negative and positive emotional displays; (2) increases in social-cognitive understanding as indexed through emotion knowledge and social problem-solving abilities, and (3) greater emotion regulation (i.e., positive emotionality, effortful control). To further identify which children may profit the most in this supportive environment, another aim is to test the theory-guided hypothesis that children?s physiological reactivity to environmental challenges magnifies associations among constructive IPC and the three classes of mediating mechanisms. Building on the solid base of a strong conceptual framework and promising preliminary findings, this application will test these aims by following a sample of 250 4-year-old children and their parents over three annual measurement occasions. The multi-method, multi-informant, and multi-level measurement battery combined with powerful quantitative analyses will generate authoritative tests of the novel hypotheses. High methodological innovation and rigor is also evident in the use of the latest, sophisticated measures of the proposed mediators (e.g., eye tracking measures of emotion-biased attention; precise computer generated manipulations of emotion stimuli in emotion knowledge assessments) and physiological moderators (e.g., assessment of three stress-sensitive neurobiological systems). Thus, this study has the potential to significantly advance knowledge on mechanisms and conditions by which constructive IPC increases children?s adjustment and inform clinical initiatives designed to maximize the welfare of children and families.